From Cutting Lawns to Building Indiana’s Largest Lending Bank

Real estate, I believe, is the best asset you can have because it was tax advantaged. When you do build up a lot of wealth, sometimes if you maintain that property, you can go borrow money and still pay no tax. I always tell all my staff, the best denial is a quick denial. So, if we can't help you right now, that just means right now, not forever. Did the loan go through? Well, the loan went through. Now, I'm understanding why the 2008 mortgage crisis happened. Welcome back to the Roots podcast. I'm here with my co-host Max Moore, co-founder of Roots Realy Co. , and I am your other co-host, Tyler Lingal. We are here today with Derek Christie. He is the uh CEO and founder of Approved Mortgage, the largest and oldest mortgage banker in Indianapolis. Um they have uh funded over 6. 5 billion in loans. Um as well as a part of his many real estate investment entities. They've done over 150 million in deals and he's been a part of raising funds, syndications, lots of great stuff. So Derek, appreciate you coming on the podcast. Yeah, thanks for having me, guys. Yeah, we love working with approved mortgage. We were talking briefly before uh going through all those stats lists and pulling them apart. And I was just thinking like 65 billion in home loans. What's the average down payment of like a home loan? I I want to figure out how much real estate volume that is. 65. That's a lot of outcome. 6. 5 billion. 6. 5 billion. Got it. See, he just 10xed. I love the way you think. I like the way you think. Oh, yeah. I guess it will be 65 billion soon. Yeah. Right. So, we do a lot of of business with Approved. Uh, and I have to say that the systems are absolutely flawless getting to work with Renado. Um, and I've got people calling me all the time from Approved trying to hop on. I'm like, I got Rnado. Yeah. Stop calling me. I just say it's just too easy and smooth. It's like I'm always going downhill where whereas Rocket Mortgage or something you're like fighting your way to get to who's actually making the decisions being passed around to a million different people. Yeah. It's the difference of being a local lender, right? Yeah. You know the landscape. you we like you drive the streets, you know, you know what we have here. Everybody that we've had on the show thus far, there's been one common trend uh that all those accolades I think are built on the back of which is some version of a hustle in high school. And I want to kind of take you back Yeah. to uh you live grew up in Greenwood, right? Yeah. Yeah. You know, early days uh living living in Greenwood, hustling around in high school. Did you have some sort of high school hustle? I did. I did. Yeah. Yeah, I did. What was that? Uh, so originally, you know, when I grew up, I I cut grass for the for the widows on the street. My mother said, "Oh, go cut go cut the gr Mrs. Pearson, Mrs. Go." Started as a philanthropist and now you're It was because I told I said, "Mom, you know, I mean, that's like two acres and it's $15. Gas was gas prices are pretty high in the 80s." And so I said, I I'm not making any money, but it was a good benevolent, you know, thing to do. And it got me learning like, oh, I'm I'm, you know, trading a service for dollars. But then I So then after that, I was young in high school, I think, and started right senior year like with a with a a good friend of mine still today. We started a cleaning company. And so just, you know, labor and so we were cleaning commercial, you know, things. And then, you know, started to run payroll and, you know, you start to learn business as a small business. But, you know, that's kind of the way it started out in my side hustle and then, you know, just kind of continued from there. Yeah. Did that business fizzle out? Like where where do mortgages interject into your We sold that little company. We we sold it. We had some equipment and we we sold that business and and then we um and then I ended up getting a real job, you know, at uh at Credential Insurance Company of America. and and so I got some experience, got my uh you know, health and life license, got my um uh PNC license and my series 6 and 63 so I could do mutual funds. And so that kind of got me into the financial services world and from there I worked there only about a year and and from there I got uh into the mortgage businesses still this, you know, the same, you know, today. Uh I own approved mortgage and have, you know, for all those years. Yeah. Everybody that has a a success track, it's like the high school hustle is is there because you just have this this drive to to go and make money. I I cut grass, clean gutters, pressure wash, whatever I can get my hands on that at the end somebody was handing me 30 bucks to, you know, buy that mountain bike or whatever I wanted. Uh and and to be able to scale that up, it's always fascinating um to to hear the the background of how much that What would you say when you were doing that high school hustle? It sounded like you were you were doing the scrubbing and cleaning for a little bit until you got employees. Um, how long were you actually doing like the dayto-day and like literally showing up to clean? Uh, yeah. I think it was I think we did that for a couple of years and so sometimes um with cleaning people don't show up. We did a bowling alley. It was an 80 lane bowling alley and you couldn't start to clean the bowling alley until bowling alley until 3:00 a. m. because that's when the leagues ended. Oh wow. It's horrible. And guess what? you know, you get a call at like 3:05 like Janie didn't show up, you know, so you'd have to go drive out of course like, okay, I'll tell you, 80 lanes, you feel like it'll never end. And it didn't until the sun came up. But uh but but it was a good experience. Did you have second thoughts about starting a cleaning business? Every time they called me said somebody didn't show up. Yes. Yeah. The day you sold that business was one of the better days. That was a great day, I would assume. But you know that so that was that was very intense in in managing that labor and so it was easier from there. So but it was great experience. Um yeah and my question that I'm kind of curious about is what was the what's the biggest takeaway that you still carry with you from that experience of that h high school hustle? um you you just that um you know the the grassroots of of building something no matter how small um you know we've just you know we've snowballed you know that success and built on that success through the years but like you said I mean you just work toward a goal you got you've got a goal no matter what that is your mountain bike or you know for me uh my tennis racket or what whatever it is you're you're you know you're working for you've usually got a a financial goal attached to it sometimes s after a while, you know, it transcends that. It's more about the people than sometimes than a financial goal. Uh the people you serve, the people you work with, um and creating something, you know, greater than yourself. I think that happens when passion and discipline meet each other. Yeah. You kind of know that you're on a mission headed towards something bigger, right, than just cleaning, you know, lane 37 to get to 38 to to 39. Uh, and that's awesome. I I am impressed by the ability to to make the mistakes and scale to an exit of a company and then jump into the the world of mutual funds. Uh, which to me sounds like a lot of spreadsheets and and not a lot of people. Um, the mortgage industry, I'm always fascinated how do you how do you get to approved where you're at today? Um, who did you have to be under to to learn how to scale a mortgage company? Yeah. You know, when I got in the business by intention, a lot of times this happens in a company. The guy that owned the company, it was just about 6 months I was there. I went to work there. You'd have to get be licensed at this time. You know, you weren't licensed. It's a good thing to be licensed, you know. Uh, so it raises a caliber of people in the industry. But when I um uh he was going to show me everything, you know, by by good intention. You're like, I'm going to train you. you don't have to worry about. So my first appointment I said hey you know they're here and like I step out of the room like where are you? Oh I'm not going to be able to make it. I didn't know what I was doing at all. All I had was a financial calculator to calculate the the amortization of a of a monthly payment. And I said well your payment will be x amount of dollars. How do you feel about that? Yeah that's fine. Okay great. Let's first time I'd looked at a uniform residential loan application. Never seen it before. What's your name? And so you just start working your way through it and like it was actually pretty painless. Did the loan go through? Well, the loan went through. Uh now I'm understanding why the 2008 mortgage crisis happened. Yeah. Yeah. That wasn't solely the reason, but um but no, I I had those appointments on a Thursday. I had two appointments on a Thursday. I still worked at Credential and Friday I resigned. Wow. Because I did enjoy even that one day I knew it was just it just felt right. And what what is that feeling uh that is so rewarding about walking someone through the mortgage process? like what is the it you are the one without the funding the American dream doesn't doesn't happen and so you know for me you go well you know the you know in America we say you know oh it's the American dream you know owning a home and um and so being a being a even a small part of that be like hey if you're facilitating that capital uh that financing even a small part a large part yeah yeah yeah so yeah I mean they're the ones earning all the money to pay it back but but yeah what we do it's a it's an honor for them to trust you you with a lot of times what is their largest investment of their of their life for most consumers. Yeah. I see less um sh I mean there are some sharks I'm sure in the mortgage industry. I see more people that genuinely want to help people and educate people on um personal finances and the right loan choice etc. Um in this industry yeah we've just had a number of high quality mortgage. It's hard for me to pick who to refer business to. There's some really great people out there that actually really care about what they do. And if I send them a text at 9:00 p. m. about a client, they'll they'll actually answer. Ronaldo, your your son-in-law, who we do a lot of business with, as well as some others. Um, I don't know if I I see that with some agents, but the percentage of agents who are genuinely uh very well put together, organized, and educational, it doesn't feel like it's as high of a percentage for and maybe that's just the selection of mortgage brokers and uh originators we've been working with. Is that a barrier to entry problem? Maybe in the because you're comparing the the real estate agent to a mortgage broker, right? It's probably just the best of the best in any industry you're impressed with, right? Because I'm like, maybe Ronado just only deals with amazing real estate agencies like, oh, real estate. But I don't know. I don't know about that. I think you get a lot more hobbyists in our industry as well as some others. A lot a lot of the agency does work. They are high quality as well. Um, and um, I mean, you guys are standout and you know, so I I think you probably try gravitate to one another. Um, so players and mingle with A players, right? And I know that especially in real estate, um, people like their flexibility and mortgage is just as flexible. I mean, you know, people apply on the mobile application on their phone. I mean, it's very easy. Um, work outside the office all the time. You know, most of the time spent, people are working outside the office even in our company. Um, but um, but real estate is really seen as the ultimate flex, you know, and and so everyone wants to be in real estate. They do. They do. Yeah. Yeah. And so we, you know, kind of recruiting. We're like, "Well, hey, we're flexible, too." You know, but I don't know. It's like, you just see those videos of a real estate agent going through the Starbucks line and getting Starbucks and they're, you know, but um but but no, both the careers are are very very flexible. Um I find the the people on the mortgage are a little bit more maybe numbersoriented. Yeah. Um and so, you know, math's kind of their jam. Maybe, you know, maybe that's a difference. So, well, when you sign up to be a real estate agent, it's so wide in so many avenues. I can go work for new builds or I can do FHA first-time home buyers. I can try to focus on listings. It's so wide and you don't even know how to spend your day. What I appreciate about the mortgage industry is that there seems to be more there's still this unlimited sales capacity to build a big pipeline and make unlimited income because it's a salesbased commission based industry. But there's a little more of a set path I see in some of these organizations. Yeah. which can be helpful for someone. Yeah. Ours is very broad because we have I I the name approved mortgage I don't like saying you know uh denied you know so so so I never liked it. In fact it was the wor you know like there's one part about your job or a few things you go I do not like. I never like telling somebody they didn't get approved for their mortgage. So like the name approved mortgage came to me really easy. And so I never wanted to tell somebody they're they're denied. So I got every program that existed. So I never had to say it. Now, sometimes you have to say it, but we want to say it quick. I always tell all my staff, the the best denial is a quick denial. So, if we can't help you right now, that just means right now, not forever. You know, we're going to we're going to show you you like, look, here's the the way we're going to walk you through the way, you know, to set yourself to be to be approved in the future. But the vast majority of people we talk to are, they are approved because we have all the different loan programs. But I tell, you know, our staff, the positive is we have all those loan programs. The downside is you got to know them all. So, yeah. So, they they have a lot, you know, to to traverse when it comes to because it could be, like you said, could be new construction, could be doing an FHA loan, VA loan, you know, conventional. We even do even we even do commercial lending. So, we'll do we'll do commercial loans as well. So, it's not the majority of what we do, but a lot of our borrowers um our clients are self-employed or they own a building and they need financing, you know, for their business or for their for their uh for their commercial property as well. I don't think I was aware of that. I have sent a couple people commercial wise. Well, we keep a few secrets. I mean, we we got to have a few ace cards. Um h how do you go from when did you step out of production and for approved, you know? Um, I probably probably when I got involved in commercial real estate was owning commercial real estate. I bought a big package back in 2006. It's about $26 million we bought and and probably at that time then I then I stuck step back from the personal production and then you know overseeing the the mortgage loan officers um and then then we started to build a portfolio then. Yeah. And that was in 2006 I think it was. Most of I think most of our viewers are going to be more in the lane of real estate investors just given the brand that we we attract. Um because we are real estate investors ourselves. Break a syndication down for me from a high level. Oh, sure. Yeah. Well, the syndication is on a single asset. So, you know, you're like, hey, this is this is the asset here. Like we just had a 120 unit apartment building and so it's like this is the asset we're buying. You know what you know what it is. you've got the financials and so the syndication as opposed to a fund where maybe we don't have the asset picked out right now. We're investing into this fund. You're getting a return, an expected return, a targeted return in the fund, but we're going to buy more than one, you know, asset. So, you're going to own multiple assets, have some diversity in the fund. And you know, myself, I believe in this. I invested in 12 different funds as a as a limited partner. And now today I do syndications um as the general partner and I have other limited partners that invest uh in the in those assets. So and so you're kind of I I think kind of filling it in for the audience. So it's essentially the capital stack. You have many people filling in the equity portion. You're still using some bank money um some senior debt. Then there's mezzanine. I don't know what all is involved in your capital stack but there's plenty of blogs people can read about capital stack. So, it's the equity portion of the capital stack. There's over a certain amount of people involved in a syndication, right? What I'm curious for is I think I get that, but I'm like, okay, who is finding these deals? Are you guys just recruiting like deal finders that are cold calling? You just like trade in behind closed doors like you know, hey, we got this. Yeah. And are you actually how much time are you spending doing that or have you built the reputation that feels come to you? It's a little bit of it's a little bit of of all those things. So, so there's people on our team that that are going out looking for deals. Um, we're all looking for deals. Uh, that's one of the toughest things is if you find the right deal, the money will come. You know, if if if the deal's right, you know, people want to invest in a in a great deal. Um, but then some of it, you know, you you've got to put those marry those together. You know, the right opportunity. Um we fortunately had an offmarket opportunity come available that we were we were able to acquire um this 120 unit apartment complex and um uh and it was right in our backyard. It was in Center Grove schools. It's where I live and where my office is at. Uh so my office is literally a mile away and so that was an offmarket deal. But, you know, then you then you've got to have, you know, like you said, you've got to have the investor relationship and some of that is building, you know, a personal brand and and sometimes the brokers, you're the one they call because they know that you have the finance, you can perform, you have the ability. What the what the agent obviously wants to know is that obviously the day of closing, you know, that you're going to hit that closing date, you're going to have the funding, and so they know, they have the confidence that, you know, like I'm I'm teamed up with Greg Allen, Allen Commercial Group. He's been in the business since 1975. He's got a great reputation. I've been I've been at it, you know, since the '9s. And so they're like, "Hey, these two guys, they're closers." And so there's a confidence there to win the purchase sale agreement and and have the confidence that seller has the confidence we're going to be at the closing table with cash. Yeah. We had um Dave Short come on the podcast and he's done I don't even know how many over 500 500 flips. Wow. And he doesn't do any paid marketing or anything to find them. He just Yeah. They know he's going to close on it. If you're an agent and you have a pocket listing that is distressed, who you're gonna call Dave, right? He's done 500. He's gonna get you paid. He paid 3% from his own cash. These agents don't have to worry about am I going to work in my own deal, right? And that's what you want. You want to have that reputation that this guy's a closer. So, wherever someone's at, you obviously that we talk about the networking tree, which is kind of this like start with one person and then that person's going to lead you to three others to have coffees with, which is going to lead and all the while showing them that you're listening to what they're saying and implementing it, right? Like, hey, you recommended I read this book. I read the book. Here's what my takeaway is. Here's how I'm applying it. And then, oh wow, this guy's the real deal. If I have something to help him, I'm going to do that, right? Which is how me and Max started as real estate agents. I started as a teacher and had very little clue of what it looked like to buy property and then within three years had built like a seven, you know, property, residential portfolio from this exact thing, right, of intentional uh networking and just following up with people and following through with people, right? That was kind of uh going really deep into networking. But I do want to go back to the syndication really quick. The one objection I hear a lot of people saying to syndications that I would love to get your opinion on is but there's so many hands in the cookie jar. I know some very very successful people that have one to two partners their whole time. Yeah. It's just their equity and maybe they only can do x many deals they can't do. We're going to do 50 million deals. Whatever it is. I feel like everybody's sentiment is don't give up equity. Yeah. Right. So, I'm just like, why do you like to have 15, 20, I don't know how 100 in I don't know how many investors are in these deals? Seems like a lot of voices, a lot of people that need to get paid. A lot of expectation. Well, number one, they they the LPs that invest the money, you know, they've got to trust the GP. Again, it goes down to trust and and probably a track record. And so, number one, you know, that's it. So, and number two, they don't want to be involved in the day-to-day. They want passive income. And so that LP says, "Oh, I like this deal." They're going out working for free for me, finding the right deal. I don't charge them every every look, you know, we do every time we underwrite a deal. We don't ask for a check. Yeah. You know, we do all those pro bono, you know, all the nine of them. Then the 10th one that says, "Oh, that's the right one." Then then we call the Elpinko. Okay. Well, here now we've got the property. And so they're like, "Great, you know, good job, fellas." Uh and so um so we're you know and many times you know the way these deals work sometimes what's called waterfalls and so you know we got to find the right one too because it's got to make financial sense they have to make money a lot of times we're paying an 8% preferred return we make nothing make zero now 8% that's all you make in the stock market usually on average right that's like around since the great depression you go well you might make 8% a year so we we pay that as an example 8% could be a preferred return we make nothing. So, it's like we've got to we've got to knock the cover off the ball, you know, on these investments so that we make something, too. And then, you know, that might only be, you know, that might only be, you know, starting at 30%. So, the it's still the LPs getting 70%. They're getting the lion share of the money. So, yeah, there's other hands in there, but those hands are doing a lot of work, finding the deals, managing the deals. They have the expertise, you know, like 30 50 years experience. And you know, if you went out and hired those people, you know, we'd be really expensive, right? If I worked at a corporate, I think it makes a lot of sense for the LPS. I don't disagree that. I meant for you. Well, right. Well, I just always think about the LPS cuz now they own 120 doors, right? You know, so it's it's rough when you own one rental house and they move out. Scary, right? Like, oh no, my rent went to zero. That doesn't happen. You know, now you own this nice quality asset for me, too. So, for the LPS and for the GP, I can invest. They can invest. we invest together in a higher quality asset because we've combined our our our capital together in that capital stack. So they're getting they get uh 8% equity and 8% gosh, they're getting 8% preferred dividend. So So what they invested they they get, you know, $100,000 invested, they're getting $8,000. So for USGP, you're you're the skin that you're getting is the equity. Yeah. I mean, we're putting in equity and they're putting in equity. And so usually what that what that looks like is a 65% you know financing and 35% downstroke. Mhm. So yeah I mean that it all makes sense when I look at it on paper and then I go okay how do you go start one? And for you uh the coattail was being able to be an LP right within the deals seeing how somebody else was was Yeah. I mean I I because I you know I wanted the same thing. I wanted to invest in great assets and so then you know once you know like anything once you learn you know it's okay well this is how the structure works and so forth and you know then we um you know then we said okay well this is something we want to move forward and build this portfolio and you always want to put a few of your own touches on it you know and um so I'd love to get your opinion on this we work with a lot of people investing in one to four units um and let's just say water pipe burst insurance claim tenant has to move out oh your income's gone got to pay for this. Can be higher capbacks, can be very risky, but you have 100% equity in the deal. There's nobody else, right? Um so let's just say the market does what it did in, you know, 2020 to 2022 and just goes crazy. Oh, like they could have a higher cash on cash return um you know, potentially with 100% ownership of the asset versus spreading out the risk through an LP position. Who do you think should do just do the LP investing safe, easy, Derek's going to do all the work for me versus no, I'm go out, buy that duplex, get it started. It really depends on their bandwidth as far as how much time they have. If they're like, man, I really love to go do plumbing, you know, like in my extra time. That's what I I love to fiddle on the back of that toilet tank, you know? That's that's just that's good. That's good times, you know? And like if that's you, like I'd just rather fix everything myself or or uh you know, I know how to do some electrical and all. Um some people like, oh, I don't have to pay anybody. I can do that. I make a little bit of you know, equity or money. Um that never really appealed to me. Um so, you know, like in the apartment scenario, we even for the day-to-day, we have a third-party manager. So, they're they're really good at property management. So, you know, hiring our our full-time maintenance tech, hiring our leasing agent. I mean, so that's that's what they do. So, we we have a um you we have a you know, it's economies of scale immediately. And and it's economies of scale. And um it's just like I I'm never going to see anybody really say, "Man, I'll tell you what, that's how I got wealthy is doing my own plumbing, right? You know, that that's really You haven't met Rex Fisher yet?" Yeah. No, he replaced a lot of furnaces and he's actually doing pretty well now. Yeah. But at some point in time, you graduate from that, right? Yeah. No, he's not doing it anymore. If you're going to scale and and so, yeah, it's okay in the beginning if you've got some time. But if you don't, if you're like, you know, I'm pretty successful at my at my career and you know, but I want to invest in real estate. Talk about real estate for a minute. I mean, real estate is one of the best uh what I believe is the best best asset you can have because, you know, it's tax advantaged. Um, when you do build up a lot of wealth, um, you know, sometimes if you maintain that property, you can go borrow money and you still pay no tax. It's a loan. It's not a sale. It's not a taxable event. It's not a distribution. Cash refi. Yeah. You do a cash out refinance and I mean, you've got cash. You still own the property. It's like, you know, is this legal? You know, so yeah, it is. It's it's in the IRS tax code. So that's why so many people are attracted to real estate. Now, if somebody's full-time real estate, you guys have a benefit because you're you have a real estate license. So, it automatically makes you full-time real estate, your profession. Other people, that's what happened to me when I bought that $26 million package um back in ' 06. Then, um that got me as full-time real estate and I could fully depreciate. Uh so, that was really offsetting my income, what taxes I was paying when I made the money from the mortgage business. Now, I was full-time real estate. I was spending enough hours per year and then so it's a fantastic, you know, tax benefit as well. kind of translating that for the audience. You now could count those uh losses against your active income from your day job, which most people can't. It's passive losses, so it can only be applied to passive income. There's different brackets there. The amount of realators, I hope that get to watch this part. When you compare apple apples to apples, my small little tiny chunky portfolio that has its own problems, right? Um, the amount that that pulls my tax rate down compared to the next guy that does the same exact production as me that owns no rentals, still full-time in full-time in real estate, still has that tax status compared to me who has a portfolio. It's like second to none how much I'm I'm saving paying maybe a fraction of what they're an eighth of what they're paying. Well, they get a 3% credit baked in too, right? But they're not buying property. No, it's it's it's I don't think people understand they don't understand. I don't think they understand the economics of it or else they would be doing it. Uh because you know, you get the appreciation, right? You get the mortgage balance payown. You you know, every month you you get the you get the depreciation that you're able to to write off. I mean uh when you talk about companies that sell, everybody's like, "Oh, it sold for a 10x multiple." That's real estate, right? I mean, that's that's real estate. So, I mean, it's it's a great multiple. uh aside from all the other, you know, benefits that that comes with it, right? It's every year around, you know, Februaryish, Tyler will go have that special meeting with his accountant and he'll text me and say, "I remember why I owned real estate now." Sorry for complaining about it all year. The amount the amount that you're able to save there, that's it's fascinating. I what you were asking is why would you go buy the single family? Your response, you know, if you want to fix a toilet, go do it. That's great. All our investors just fired us. conduct but but not necessarily right so some people may say oh if I want to do because I was kind of hearing what you said some people want the control of it they want the control if they want to do that doesn't mean you can't have a fantastic handyman in your corner a great great you know contractor well it starts it starts at the single family I think and you you can get that duplex get the quad but once you're done with that I feel like you got to scope out and look at what how do I get into commercial diversifying you're doing it right now diversifying into commercial you went to STR. Uh you stepped up to the plate and swung at 26 million in a package, but what what was in that that big package? Was it single family homes or is it No, they were there were retail shopping centers, some development ground, office space. Uh so it was a it was a portfolio. Um so yeah. Yeah, it seems like a behemoth, but I think it's just a matter of zeros, right? So the reason people I bought, truth be told, so my first piece of real estate I bought was my home, my personal home. But then the second one was a rental house. So I bought one and so it was 10 I think it was back then it was $10,000 is what I had to bring to the table, you know. So you know it wasn't 50,000 because if it was 50 I wouldn't have done it cuz I didn't have it. I didn't I didn't have that much. Um so I think that's why you know because syndicated deals are usually when you're going with an LP unfortunately it's you can't take a $10,000 investment. It's got to be more. It's got to be, you know, most indications 50, 100, 250,000. So, they're usually more zeros, right? Not only do you have to have the network, but you also have to have the net worth to be able to go and and access. Well said. Sorry for the quick interruption. We have no sponsors on this show. It's completely free. Just Max and I trying to teach people how to build wealth through real estate. However, we do have an ask for you. If you're on YouTube, could you like this, subscribe, Spotify, follow, and then please, please, please share this episode with a friend or a colleague or someone that would benefit from it? That would help us grow our audience and we would massively appreciate it. All right, that's it. Back to the rest of the episode. I would love to go back cuz like I think for a lot of listeners including me I was going to say three years ago but still today um you went from being personal production I'm assuming being a really good mortgage broker mortgage originator to buying a $26 million portfolio. We just we didn't even cover anything in between there. And I'm just like how did you we had we had a good we had uh John Murphy on. He's a successful uh started MJW Mortgage. They're probably a decently sized competitor for you guys. Oh yeah. um both high quality companies, great um originators, but um he talked a lot about what makes a really good mortgage broker. And the first thing he started with was integrity. Yeah. And thought I thought he was going to say hustle, grit, whatever. It was like high integrity. I was like, whoa. And then he just harped on that for the next like 15 minutes. What would you say made you successful when you joined and you were the little bottom of the toen pole looking at the mortgage application to to start really starting that flywheel spinning in the word space. What helped you get that going? Yeah. Well, the one was the passion that I really loved making it happen for people. You know, again, being in it was like I said, it still is huge honor that they trust you with something. so important to their family. So for me that that I had a passion for that it was like it's like you know wow they could have and I was young you know so for me at the time it's like there's people like twice my age you know they picked me you know it was like a I can't believe this. So it was a huge responsibility number one um and I was honored that they selected me. So I worked my butt off to make sure everything went super smooth. And back then you know we we weren't texting you know we had phones. So I had like three phones in my office. I'd literally be answering multiple phone. Okay, please hold, you know, and and answer because I wouldn't let it ring. I wouldn't let it go to voicemail. I'd answer every call, my cell phone, the two phones in my office, the three phones going, multiple on hold. Oh, yeah. So, I would and and so because I I I what it did, and I'm still probably scarred today, but um the urgency I had extreme urgency. I probably still do. Um just extreme urgency now. It's just who I am. But I I don't you there's it's it's rare if like I don't call somebody back in the same day. It's funny because uh I think there's a commonality here with mortgage brokers and uh real estate agents and probably anyone who's trying to get on that sales service path. Uh we had a mortgage broker come to our team meeting from Fairway Mortgage. Uh not trying to uh d uh kind of scoot you guys, but he he mentioned we asked him like what what makes you so successful? And he was like, I he's like, I am attached to this. And he's like, it doesn't matter the time of the day. I care about people and I want them to get answers quickly. Yeah. And I hear that from way too many people and I hate the answer because I'm trying to get away from this. Right. Right. And my response times have been generally gearing slower over the course of my career because the trade-off is larger now that I'm a dad and want to be a good husband, want to have good mental, that's a challenge, health. Yeah. Whereas the beginning I was like, I'll leave everything for this dream. let me just answer everything and you're just responding to like stupid stuff at 10 p. m. like why am I doing this? But it was so important to building the personal brand at the beginning, right? Which it sounds like it was for you. Oh yeah. No, absolutely. Has that agency backed down now? Do you find more headsp space from that or um I I'm still like that. Um you know, so like what's what's in my you know, now I have a lot of people that work for me. So, um, so now I don't take those if there's a, you know, I don't take maintenance issues, you know, if there's a maintenance, that's not me. So, I want them to have that same urgency with the maintenance issues or or with the leasing, um, you know, or with the mortgages, but, you know, I'm not taking all those calls. So, what's in my uh, sphere as far as my responsibility, I'm still that way. I I still have extreme urgency. Um and so so but I'm able I'm able to because um because I don't I don't have but with your team. With my team. Yeah. Yeah. I think the probably differentiator from uh what you struggle with is and what you said is three phones in the office, right? Yeah. Not anymore, right? Yeah. Yeah. Yeah. But when you went home, the phone stayed in the office. I think that's one of the struggles. You still had a cell phone? I mean, come on. I'm not that old. Yeah. I was guessing. I still had a cell phone. I I guess in my head I'm thinking you're just giving out the office number, right? Reach me at the office. No, you you you would. Yeah. I mean, it was it was and and we had those conversations with uh you know, my wife's like, you know, this is our family vacation. You know, those are th you know, that's that's you got to make those decisions, you know, about how to balance, you know, work and family. It's like, but remember why we're on the vacation, right? I know. I know. I tried that one, Max. I I That's That's tough. That's tough. Uh I bet now she's not as annoyed with Well, I mean there's a Yeah. So I mean you know again about back then like there's maybe some understanding. Yeah. Yeah. Some maybe not some. Do you think you could have gone like 20% less intense? Yeah, I think I think you could. I think you can always set boundaries and still be successful. Um sometimes, you know, we take it too far, you know, and Yeah. Yeah. Absolutely. Yeah. But that's kind of my motto for the summer is like just 20% less intense and then you can enjoy the day 100% more. Yeah. You know. Yeah. And some of it it's it just depends on your your personality. Um you know like some of the loan officers you have they're like so chill, you know, and and they're and they're urgent but they're very chill. You don't typically struggle with that personally, but Yes. Same for a lot of people, they need rather they need to go 20, they need to go 100% more intense, most people. Yeah. So, so yeah, just everybody um uh everybody's personality and behavior is a little different, but um yeah, I envy the the person that can just let it go for like the rest of the evening. There's there's a problem in a transaction needs to close tomorrow and there's like it'll figure itself out or it won't and that's okay. Those in my industry in that point, I've always slept well. I I don't like oh, you know, generally it doesn't keep me up at night. So, even though it's, you know, it's like, well, there's nothing really to go on now, so I think I'll just catch some good sleep. So, that's true. I guess everything does close down. Um, I want I want to go back over to the syndications for a second. Uh, as you're building out, so this will be the first fund is what you're venting off towards. Yeah, we've done syndications. Yeah. And with a fund, you you said it's not identifying a building or the investment. You're they're betting on the horse, right? Yes. Exactly. And the and the track record. What is the when do you do you have to raise all the money before going out and looking at any deals? Kind of similar to it's the ideal scenario because then think about it if you have the money sitting in the bank man you can you can go in and negotiate a it makes a big difference in your confidence negotiating the transaction. True. Um because sometimes you can win on speed. Well, it's hard to it's hard to close really fast if you don't have the capital. Yeah. So then you go, well, I've got to get this contract and now I've got to go raise a capital enough time to be able to close and perform. And you know, some of these times you're putting down, you know, the earnest money. I mean, you may go, well, I've got a quart million dollars earnest money down. At some point in time, it goes hard. Earnest money starts to matter a lot in those deals. Yeah. Yeah. We just did, you know, it was a, you know, out of the last one we did, it was $100,000 extension fee, you know, and it was hard, you know, for you to go, well, it didn't work out. Well, you lost your you lost the 100 and the 150. So you lost 250, you know, if you walk. So you don't want to do that. So if you had the money in the fund ahead of time, then you don't have the risk of losing the earnest money. Like as an as a an example, I think where I struggle is I can find the deal. I can find the tenant. I can I can find all that. It's finding the funds. And being able to go out and and raise that much money, it's like it's a behemoth. Well, when you have a high-rade asset, it gets easier. Mhm. You know, like the fact that people a lot of people say like, well, yeah, like somebody's like, oh man, that's great. If they've owned one unit and but they they aspire to own four units, but if they can own 120 units, it's a it's a big motivator. It's the asset kind of sells itself and if you have the right integrity and brand yourself, it's a it's a no-brainer. What makes a good real estate deal for you now? Well, I mean, we're to to get, you know, investors attention, our attention, you know, we've got to have double digits and we're targeting 15% annualized return. So, we've got to find a way. There's got to be upside in for them or for you or for for for for all of us, you know. So, we've got to find an asset that's going to turn a 15% annualized return. And so, otherwise, you know, it's pro with all the time and effort it goes into, it's, you know, it's probably not worth the effort. Does that include a um because some of the nuts and bolts of how these are calculated fascinate me. Is that just from cash flow or is that including like a is that a 5-year hold and liquidating it? So everything the liquidation that disposition you could have taken no distributions you know there that's not our goal. Um and whatever whatever you you know exited whatever that disposition was at exit or the combination of that if you had distributions along the way which we always like to have that cash along the way. um in addition to the exit. So that that total uh cash proceeded from beginning to end, cradle to grave is is what that IRRa is calculated on. And how are you underwriting the deals you're doing for your syndication? How long of a hold do you typically try to hold these assets? Yeah, so we have an analyst and so that's like we we have a construction, you know, we have people that, you know, in construction like said since 1975, have an analyst. Um you know, I'm in fin I'm a finance guy. Um we have another person on the on the capital wealth side, so raising capital. So, we have a really great team. Um, and so, you know, that that uh lends itself, you know, to what, you know, to what we're doing because we have the the right talent in each each one of those areas. So, but the hold time, you know, generally probably in the sweet spot probably 3 to seven years. 3 to seven years. So, yeah, commercial, you don't find as many people investing commercial real estate saying, "I'm just going to hold this till I die." Because they real you realize really quickly even these guys owning these single family homes saying that they say it when they're like 25 like all right because it seems really smart I'm going to buy this single family home in Tuxedo Park for 100k and and it's going to be worth I financed I remember that I financed on tuxedo park I remember that but it's like they don't realize the opportunity cost of not using the equity when they realize they yes and no like the stuff I own um I have owned it and I won't sell it. Okay. But but but I but that's I didn't take outside investor capital. See with with the syndications or funds, people have to have an exit. They at some point not everybody needs their capital back, but if just one needs their capital back, you have to have an exit. Now sometimes there's there's ways to do that. You know, we can spend that off and you get, you know, a fair market you appraisal and then maybe it goes into a different fund and maybe you can continue to own that. Um but there's a taxable event then. I don't want a taxable event. So I've continued to own the property. I don't want to sell anything on the stuff that I bought with my own capital. Um, and if I wanted money, then you know, if I, you know, if I wanted to leverage capital, then I just go get a loan. Just go get a loan. I don't have to sell it. So, you have held your personal real estate. Just Yeah. Buy and hold. Yeah. You know, all that that $26 million package, you know, that and more you we bought and and Yeah. We've not sold it, so we don't want to sell it. And the cash flow. Oh, my kids don't sell it. Yeah. Yeah. Yeah. in those properties. Um is that meaningful cash flow? Yeah. For you. Yeah. Yeah. Yeah. It got to be in the beginning. You go, well, you know, now, you know, then it was like, oh, well, someday, you know, and um but but yeah, today it's it's, you know, it's it's meaningful. That's awesome. Yeah. That's really cool. Yeah. And as you get older, then eventually those mortgages go away. You know, you pay off the pay off the you don't have a mortgage anymore. Yeah. I think it's like getting over the time horizon. The beginning it sucks. It's a lot of work and energy into it and gets a little bit more stable and bubbles up here and there, but getting over that horizon, more cash flow can really start to unlock. I think that's what people struggle. I have But that's every business, isn't it? Where it's frontloaded, right? All the work's up front, all the capital's up front. Yeah. It feels like you make no money and then, you know, too many people exit right before they do. Yeah. I I think it was like Mr. Wonderful, you know, he was like the most important thing is like getting to a hundred,000. It's like these these key benchmarks. If you can just cobble together a h 100,000, right? You make good, you know, real estate or make good I just said it, you know, Freudian slip, make good investments, be it if that's, you know, real estate or or stocks or what have you. Um, but then that next benchmark is kind of like, well, it's so much easier once you've got 100,000 to get to a million. So now you've got a million in capital. Oh my gosh, the five million comes so much quicker. But but it's but it's true. like you know so Charlie Mer with Warren Buffett you know he just passed away like 99 wasn't the end he he said you know you got to figure out a way to get a $100,000 you know and then the rest becomes easy but it's like that first h 100,000 is magical what would you do with h 100,000 I put it in real estate that's what I did the first one I bought the uh ironically the person that I you know partnered with is Greg Allen I bought his office building um So that was back in 1998. So that was the first 100,000 I put in that office building and that kicked it off. Would you do you go buy an office building again or would it be another asset? Uh it'd have to be the right office building. You know, it' have to be the right market. I I I wouldn't I wouldn't say no. I wouldn't go after office, but you know, the office market the landscape's changed quite a bit. So yeah, it' have to be the right scenario. Uh most of what we own, we do own we do own office, but we own uh retail, a lot of retail, some development ground, hospitality. Um so, and multif family. Mhm. It's great. I love how diversified. And I'm a paranoid investor. Extremely paranoid. Uh so, so very very diversified. We we own Ben Franklin Insurance. We own a um you know, a independent, you know, insurance agency. Uh we finance all of our properties there. We do all of our own property management um for our company's Horizon Property Group. We don't do any third party. Um so we won't do that. Don't contact me about that. Unfortunately, we don't. Uh but um but yeah, so we do a lot of these services. My wife owns MVP Title. So she she uh you know, so the title we're able to give, you know, some business on the title side. So there's a lot of there's a lot of uh compliment to the to the group of companies. You just need a contracting business now. I know. Be a builder. And then then you own Well, my brother-in-law is a builder. There you go. And my and my he he owns Greg Allen Homes and then um uh and then my brother owns Indie Roof. So So we we do have Yeah. Yeah. Got the whole stack there. That's great. I didn't hear a real estate broker in there though. No, that's right. That's right. I've always been very sensitive about that because you know I mean you know Yeah. The real estate brokers were good to me. So, I'm like, we're, you know, we want to be supportive. That's smart. Yeah. We don't want to compete. Yeah. Put the baby first, the mortgage business. I like it. Yeah. And I've always had this theory. I don't You tell me if this is true. So, I've never I don't know that I've ever asked this question uh of a real estate professional. So, when I go and I find a property, I never go in represented. Like, if it's a commercial property, I I'll I always go through that listing agent because I know then it's a me deal because I'm like, "Well, that's double the commission." So I never go represented because does that do you think that gives me a better opportunity to win the win the deal in the commercial space? Yes. Think so. In residential I would say um if you have the acumen to go after exactly what you want and yeah I've picked up the phone and rep both sides on listings. Uh it's very rare though because a lot of people need the handholding to get to the right uh to get to an approved. They need that agent to take them that way, right? get pre-approved, then go and get on the surge. But I mean, as the buyer, when I'm competing with other buyers to win the deal. Yeah. So, so if somebody comes in represented, they go, "Well, except that offer, then I'm only making half the commission, but the So, on commercial, absolutely. I mean, most of the time it's it's just the listing agent doing it. I don't know if they're necessarily um so I think usually they just negotiate their rate. I think they might be making the same regardless is my understanding. There's just not as many buyers agents for commercial, right? It's mostly the listing agents dominate and then people work both sides. That's true. In the residential space, um it it just depends. I think um I do think there's some people that I've been on both sides and I had a contract with the seller first and the seller is really the true winner because they're paying less in total commission. the buyer didn't get better terms. They could have had representation negotiate better than I did for them. No, that's true. So, I think it really just depends in residential on how well they're able to be understand the levers like someone like you. Yeah, I think that makes sense. But yeah, I think you got we like to work both sides as listing agent. I'll put it that way. Yeah, absolutely. That's how I mean the way that you make money and stay in our industry is by bringing property to the market, right? Because everybody stopped bringing property, right, to the market. But if nobody listed property, there would be no property to buy. And having that listing and bringing a buyer to it is hands down how you That's how we've been able to get so many listings. Our listings with roots. I mean, when we are the year we started, I bet we had like not I'm not even joking like 10 listings. I we have like I don't even know this year on track for we have over 20 on the market right now. We have 20 on the market now. So I mean every month probably doing about that. So Right. And it's because we don't just post it and leave it there to hopefully hopefully someone will come by. You guys do a great job marketing. We just try to go find the buyer. That's what you should do. That's what I think your commission pays you to do. And you'll make more, too. Yeah. 79% of our listings have been limited agency this year. We're on both sides. Yeah. Because we're bringing the buyers and we usually have a have another agent represent them. So, I have done the whole me both. We've we've just had some bad experiences where it burned some bridges with the buyers or the sellers felt like there were there was some bias. So you actually give up your representation rights. We steward the deal at that point. I see. Yeah. You're not allowed to to essentially be a fiduciary. You have to just be a mouthpiece, right? And yet in some of those deals there needs to be a creative problem solving solution and it puts you in a bit of a bind. So, um I I think we try to try to bring in another agent to represent them to do it the right way. That's the benefits, I guess, of having a team. But, right, it's one of the whole purposes that we have a team, too. Yeah, absolutely. Um, thanks for coming on. We have a couple questions. Rapid fire before we wrap up. It's our best segment here. Everybody should listen to this part, okay? And it should be the whole podcast. So, talking Bersville, what is the the best place to grab a bite to eat if it's Friday night? Yeah. Got to go to Tax Man. Tax. Yeah. Why Taxman? Taxman Brewery. I mean, they u they they have all their own they make their own beer. Um so, they've got a it's a brewery. Yeah. Belgian beer and uh Gastronomy. I mean, it's the food's good. Uh they've got a wine list there. So, um Yeah. So, it's a full I see on the Instagram stories, you guys are there about once a week, if not twice a week. Yeah. Yeah. No, we're we're big supporters. Uh they're they're great friends of ours. Um and you know, Nathan and Leah, actually, we partnered with them, the Taxman Hospitality, who runs uh our church on Jefferson Event Center. Um so, they do all the catering and for weddings and events and things like that. So, yeah, we we trust them uh tremendously. We hoped we would love to get them out to Danville. So, I might I might want the Connect. Yeah, absolutely. It's a small town but and uh it has a similar look to Fortville and Bersville. Well, they've invested a lot in Bgersville. So, not only do they have tax man, but they have P&L, pizza and libations, and they uh have upseller and seller market. So, you know, actually four restaurants in downtown Bgersville. So, so they've invested heavily in Burgersville as well as they have Cityway Tax Man, they have Fortville Tax Man. So, they've been a big part of the um sort of restoration of Bgersville. They had they they kicked it off. You know, they had they they had the confidence first. You know, somebody's always got to be first. They were they were they were first. That's what you need in small town, right? We kind of have that a little bit going on in Danville. There are some restaurant hosts that have moved in to make a difference. Yeah. Danville is not hopeless at all. It's doing fine for itself. Yeah. It could just use an upgrade in terms of a place like a tax would be really cool for it. Yeah. Yeah. Some sort of staple. Yeah. What's one habit that's changed your life? One habit? Yeah. Uh, probably working out. I mean, I would say, um, like I try to every day, you know, stretch and work out. Um, you start getting a little bit older, you know what I mean by stretch, but you know, I want to be I want to be, we've talked about pickle ball, so, you know, like I want to still be able to move and stretch on the pickle ball court. So, um, so I want to be athletic as well as not just strong. Um, but, you know, so, you know, that's great. Healthy healthy joints. So, uh, so, so, yeah, but, um, that's that's probably, you know, for a quality of life, you know, and that's something that, you know, kind of as a family we do together. Everybody's kind of everybody's head space is is geared towards towards health and longevity. Yeah, that's awesome that you lead your family that way. I love it doing it for yourself, but then it's really cool to see. Hey, sometimes they you don't always want to go down to the jump, right? Yeah. It's a good point. Go through seasons. What is an area of your life you're currently working on growing? Always faith. always faith. It's it's always a journey. Um so I what started out as a ski trip like 23 years ago turned into a weekly Bible study. And so you know I've been in that Bible study. Same group of guys um back for 23 years. And so but you know it's through we've read every book of the Bible and you know some multiple times and uh so we we still continue to get together. Um in fact I'll give a shout out to some of the guys. They they moved you know they left here Indiana and moved out west to Colorado and Arizona. So, our Bible study is at 7:00 a. m. So, they're getting up and this Bible study like 5:00 a. m. , you know, it's the same guys. So, it's it's really So, through that, it's been some amazing relationships, some closest friends. Yeah. That faith is the the journey of a lifetime, right? You're never you're never perfect. Can never be in in a full image, right? But always aspiring to get closer and closer. Yeah. Absolutely. Well, thanks for coming on, man. You bet. You bet. people want to find you, where where can they find you? Oh, yeah. All of our companies are at derkchristie. com. Um, so yeah, so I think uh there's a link to all the companies there. Yeah. Yeah, we'll make sure to to link that below. Well, this has been another episode of the Roots podcast. Leave a comment below. Tell us, you know, if you want to get in on Derek's next syndication or uh or fund here. Uh bring your money. Yeah.